The government provides a number of tax incentives to encourage people to use super to save and invest for retirement.
For example, investment earnings on super are taxed at a low (concessional) rate and you pay no tax on investment earnings on an income stream, such as Telstra Super RetireAccess. Read on to find out more about tax and your super.
Any employer contributions up to the pre-tax contributions limit are subject to a 15%* contributions tax. This tax is deducted from your account at the end of each quarter, or if you leave the fund during the quarter the tax will be deducted at that time.
Post-tax contributions up to the post-tax contributions limit are not subject to any further tax.
more information is available on contribution limits for accumulation members.
Excess contributions tax
The ATO will monitor all pre-tax and post-tax contributions made to your Telstra Super account on your behalf. The Australian Tax Office (ATO) will notify you if your contributions exceed the caps. Contributions in excess of the caps are taxed as follows:
- tax on excess pre-tax contributions is at your marginal tax rate and may be paid ‘out of your pocket’ to the ATO or you may instruct Telstra Super to release funds from your account to meet the liability.
- tax on excess post-tax contributions will be taxed at the top marginal tax rate (plus Medicare levy and Budget Repair levy if applicable). For the 2013/2014 and later financial years, this excess contributions tax may not be payable if you elect to release the excess post-tax contribution plus 85% of associated earnings, or another exception applies.
The ATO has further information about excess contributions tax on their Tax on contributions page.
* This tax is 30% for members with eligible income over $300,000.
Investment returns applied to your super account are before tax and investment fees. Investment returns are taxed at the low (concessional) rate of 15%. This tax is taken out as part of the calculation of unit prices. Investment returns are tax-free for Telstra Super RetireAccess members.
Tax on lump sum withdrawals
Generally your balance may consist of both non-preserved and preserved components. Preserved super cannot be withdrawn until you reach preservation age.
The current tax rules on lump sum withdrawals from a taxed source:
Tax on taxable component
|First $195,000 tax-free.
Amounts above $195,000 taxed at 15% (plus Medicare levy).
|20% (plus Medicare levy).
Tax on payments from an income stream, such as Telstra Super RetireAccess, are treated differently to ordinary lump sum withdrawals. For more information on how income streams are taxed, select Telstra Super RetireAccess in the Super section of this website and read the information on Tax and my income stream.
From 1 July 2007, to ensure tax components decrease proportionately, any withdrawals from your account will include tax-free and taxable components relative to your account balance. For example, if your taxable component is equal to 70% of your account balance, then 70% of your withdrawal will be made from your taxable component.
For income stream payments, these components are as at commencement date of the income stream.
Spouse tax offset
If a contribution is made to an eligible spouse's account by 30 June each financial year, the contributing spouse may be able to claim a tax offset of up to $540 pa.
Contributing spouses may be able to claim an 18% tax offset on the first $3,000 of contributions made each financial year to their eligible spouse’s account, provided their spouse’s income is $10,800 or less. A partial offset is available if your partner's income is over $10,800 but less than $13,800 pa.
The following conditions must be met to be eligible:
- the receiving spouse must meet the criteria for an eligible spouse.
- the contribution must be made post-tax.
- both you and your spouse were Australian residents when the contributions were made.
- you and your spouse were not living separately and apart on a permanent basis.
- the sum of the eligible spouse's income - the total of their assessable income, reportable fringe benefits and reportable employer superannuation contributions was less than $13,800.
- if the recipient is aged 65-70 they must be gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the current financial year.
Find out more
use our Spouse tax offset calculator to determine you or your spouse's potential eligibility
to contribute to your spouse's account, download a Member and Spouse Contribution form (50kb)
to find out more about tax and your super, visit the Australian Tax Office website.